*EPF108 11/15/2004
Text: Administration to Continue Work on China Currency Issue
(Action suggested under Trade Act Section 301 would not be helpful, USTR says) (460)

The Bush administration believes China must move faster to adopt a flexible, market-based exchange rate, but the United States will not be following the course of action suggested by a petition filed September 30 under Section 301 of the Trade Act of 1974, according to the Office of the U.S. Trade Representative (USTR).

USTR spokeswoman Neena Moorjani said November 12 that administration efforts so far have resulted in the Chinese government's decision to liberalize rules governing foreign exchange transactions, strengthen and develop the finance sector, adjust interest rates, and take other steps toward increasing flexibility in financial policymaking.

"A Section 301 action would not assist in these [administration] efforts, and indeed could be more damaging than helpful at this time. We therefore must decline to accept the course of action recommended through this latest petition," she said.

Following is the text of Moorjani's statement:

(begin text)

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C. 20508
USTR Press Releases are available on the USTR website at www.ustr.gov

For Immediate Release:
November 12, 2004

Contact: USTR Press Office
(202) 395-3230

Statement of Neena Moorjani
USTR Spokesperson
November 12, 2004
Regarding a Section 301 Petition on China's Currency Regime

On September 30, we received another petition under Section 301 of the Trade Act of 1974 on the issue of China's currency.

The petition was similar to the petition filed on September 9 by labor unions and others.

As we have previously made clear, the Administration believes China must move faster to adopt a flexible, market-based exchange rate and we have acted aggressively to persuade the Chinese government to undertake the complex transition toward that goal. Working closely with U.S. Treasury officials, China, according to Governor Zhou of China's People Bank, has made this a top priority and has made a series of policy moves to liberalize rules governing foreign exchange transactions, moved to strengthen and develop the finance sector, adjusted interest rates, and taken other steps toward increasing flexibility in financial policymaking; these are clear signs that the Administration's efforts are paying dividends.

A Section 301 action would not assist in these efforts, and indeed could be more damaging than helpful at this time. We therefore must decline to accept the course of action recommended through this latest petition.

Under the leadership of Secretary Snow and the Treasury, we will continue to work with Members of Congress on this issue as we seek to achieve our common goal: a more flexible, market-based exchange rate for China's currency and a level playing field for American businesses, workers, farmers and service providers.

(end text)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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